- EBITDA: 41% increase to $1.57 million versus $1.11 million in the first quarter of 2005.
- Operating revenue: $4.83 million, versus $4.14 million in the first quarter of 2005, an increase of 17%.
- Expenses: $3.13 million, versus $2.83 million in the first quarter of 2005, an increase of 10%.
- NPAT: 39% increase to $1.15 million versus $.83 million in the first quarter of 2005.
New Zealand Exchange Limited (NZX) today announced a first quarter 2006 EBITDA result of $1.57 million. This represents a 41% increase on the $1.11 million EBITDA result recorded for the same quarter of 2005. Net profit after tax reached $1.15 million, an increase of 39% over the same period in 2005. This result was achieved on operating revenue of $4.83 million, which increased 17%.
“The key financial indicators for NZX are showing double digit growth in a period when capital markets have continued to perform strongly,” said NZX CEO Mark Weldon.
“This demonstrates the soundness of NZX’s ongoing focus on creating operating leverage and generating quality cashflow from both the core markets business and its subsidiaries. In addition, improved forecasts for the rest of 2006 reflect the ongoing growth in operating leverage achieved by NZX,” said Weldon.
II. Consistent achievements across the NZX Group
Resilience. As indicated at year end 2005, NZX’s business performance continues to show that its financial performance is largely independent of short term market sentiment.
“Listings and index performance have been stronger this quarter than the equivalent period in 2005, however NZX’s sustainable, independent and growing revenue streams continue to deliver consistent and solid results irrespective of these factors,” said Weldon.
Operating leverage. At year end 2005 NZX’s business model reached a scale where new revenue grows faster than expenses and new, high quality revenue streams can be driven by an existing, and stable, cost base. This has been further illustrated this quarter by a 17% increase in revenue yielding and an increase in EBITDA of 41% versus the first quarter of 2005.
Smartshares and LINK Market Services value. These two businesses are at a point where their current and future potential should be factored in as contributors to the value of the NZX Group overall. In addition, Smartshares and LINK are contributing to the competitive landscape in New Zealand capital markets.
New investment. NZX acquired the business infrastructure of rural data supplier Agri-Fax earlier this month. NZX will conduct a phased integration of the operational side of the business, while the main emphasis is on strong revenue growth opportunities.
“Our investment in Agri-Fax is another means of using existing NZX assets to add value to the rural sector, which we recognise as critical to the New Zealand economy,” said Weldon.
Strong cashflow. EBITDA reached $1.57 million for the quarter, a 41% increase over the same period in 2005. This provides an indication of NZX Group’s strong growth in operational cash flow. There was no non-recurring expenditure.
“Going forward, the stability of our core earnings gives NZX the ability to optimise our balance sheet and capital structure,” said Weldon.
III. Subsidiary Businesses
LINK Market Services
LINK Market Services, a joint venture, is equity accounted. The LINK result reflects the impact of depreciation and amortisation expenses, and the quarter one costs of migrating all clients from the old BK Registries system to the new NZ Oscar technology platform.
Smartshares
Funds under management (FUM) is the key valuation metric in this business. Smartshares finished the quarter with $352 million in FUM, $215 million in listed Exchange Traded Funds (ETFs) and $137 million in (non-listed) wholesale funds.
Smartshares has a robust business model, is at scale, and future FUM growth will drive improved EBITDA performance off a fixed operating base.
Operating revenue reached $434,000 in this quarter, a 49% increase over the same period last year. The EBITDA gain was $67,000 compared with a loss of $11,000 in 2005.
“Smartshares is well positioned to grow FUM throughout the remainder of 2006, with excellent returns across all four funds, but most particularly in smartMOZY and smartFONZ” said Geoff Brown, Head of Smartshares.
Download:
- NZX First Quarter 2006 Results (PDF, 100KB)
- NZX First Quarter 2006 Operating Metrics (PDF, 34KB)
ENDS
About New Zealand Exchange Limited (NZX) NZX operates New Zealand’s sole registered securities exchange. Utilising its proprietary FASTER technology, NZX facilitates fully electronic trading, clearing and settlements across its three principal markets, the NZSX – Stock Market, the NZDX – Debt Market, and the NZAX – Alternative Market. In addition, NZX offers a comprehensive suite of data products, indices and funds, and is responsible for the ongoing surveillance and regulation of New Zealand’s securities markets.
By providing a ready market for capital raising and business growth, NZX is at the forefront of business in New Zealand. At both the Board and management levels, NZX is committed to developing and ensuring the integrity and international competitiveness of New Zealand’s securities markets. NZX demutualised in October 2002 and became a publicly listed company on 4 June 2003. For more information, visit www.nzx.com.
